Single Touch Payroll is changing the way employers report their employees tax and super information to the ATO.
Real time reporting to the ATO
STP requires employers to report to the Australian Taxation Office (ATO) information on employees’ salaries and wages, allowances, deductions, PAYG Withholding and superannuation at the time they pay their employees which the ATO are calling a ‘pay event’. This means an employer will need to use some form of payroll software to allow an automatic transfer of data between an employer’s payroll provider and the ATO at the time when a pay run is finalised.
It is important to note an employer’s payroll cycle does not need to change and the employer can continue to pay its employees as usual.
Different size employers
There are separate guidelines and due dates in place depending on the size of the employer:
Employers with 20 or more employees
As STP for employers with 20 or more employees started on 1 July 2018, relevant employers should already be reporting through STP or have applied for a deferral. If you’re unsure if your current software has STP reporting, the ATO recommends talking to your software provider or tax professional.
Employers with 5-19 employees
Reporting can start anytime from 1 July to 30 September 2019. If you already use payroll software which offers STP, you can update your product and start reporting early.
Employers with 4 or less employees
Micro employers with four or less employees who don’t currently use payroll software can report STP information in other ways. The ATO has listed software developers who offer no-cost and low-cost STP solutions to make the transition smoother. There is also an option for your registered tax or BAS agent to report your STP information quarterly rather than each time you run payroll. This will be available until 30 June 2021.
To help with ease of transition for everyone involved, the ATO offers no penalties for mistakes, missed or late reports for the first year. Exemptions from STP reporting can also be provided for employers experiencing hardship, or in areas with intermittent or no internet connection.
Changes to year end reporting
Single Touch Payroll changes the way employers report their employees end-of-year information to the ATO.
If you're reporting through STP you no longer need to:
- provide payment summaries to your employees for amounts reported and finalised through STP.
- lodge a payment summary annual report to the ATO for amounts reported through STP so long as the finalisation declaration is completed by the due date.
Employers have until 31 July to finalise their employees' STP information by making a finalisation declaration through their payroll software.
Advise employees to open myGov accounts
With the STP changes it is essential that employees have access to their myGov accounts as this is where they will be able to see all year-to-date information, including tax and superannuation. It will also be where they can complete Tax File Number Declaration and Superannuation Standard Choice Forms going forward.
Employers should be advising their employees to open a myGov account if they have not already done so. While this is not mandatory, employees will need a myGov login if they want to be able to access this information throughout the year.
Impact on employees
Employees will receive an “income statement” in their ATO online services account (myGov) for the amounts reported through STP.
When the income statement is tax ready, employees will receive a notification in their myGov Inbox. They should wait for this to occur before they lodge their tax return.
Where employees use a registered agent to lodge their income tax return, their agent will be able to access the income statement.
If your employees don’t have a myGov account and cannot create one, or do not have a registered agent, they can call the ATO on 13 28 61 and they will provide the income statement.
